Dubow v Fitness First Australia Pty Ltd Fitness First Australia Pty Ltd

Supreme Court of NSW|2012-08-24|Before: Garling J

Judgment ON APPLICATION 1On 27 February 2012, I delivered judgment in the principal proceedings: Dubow v Fitness Australia Pty Ltd; Fitness First Australia Pty Ltd v Dubow [2012] NSWSC 128. The principal proceedings comprised four separate matters. The judgment made orders in each matter. 2I ordered Ms Dubow to pay Fitness First Australia Pty Ltd's ("Fitness First") costs of each of the proceedings dealt with in that judgment. 3On 9 March 2012, Fitness First filed a motion in each proceedings in which it sought identical orders. Those orders were to this effect: "1. Pursuant to s 98(4)(c) Civil Procedure Act 2005 (NSW), an order that the plaintiff is entitled to a specified gross sum in respect of costs instead of assessed costs. 2. Alternatively, an order directing the Manager, Costs Assessment, to refer the assessment of the costs of these proceedings to the same costs assessor as proceedings [numbers specified]. 3. Costs." 4In support of those motions, Fitness First relied upon an affidavit of Mr Tim Orliziki sworn 29 February 2012. 5When the motions were returned before the Court on 16 March 2012, there was no appearance by Ms Dubow. 6Counsel for Fitness First submitted that the interests of justice would be served by the making of a gross costs order. He pointed to the impecuniosity of Ms Dubow, the costs of an assessment process and the time which such an assessment would take. 7I reserved my judgment on the applications. This is the judgment dealing with those applications. 8Subsequent to my reserving my decision, I was informed by an email from Ms Dubow that on 20 March 2012, a sequestration order was made against her Estate and the Official Trustee in Bankruptcy became the trustee of her bankrupt Estate. 9By a later affidavit of Mr Orliziki of 26 April 2012, I was advised that Mr Andrew James Barnden had been nominated to replace the Official Trustee as the trustee of Ms Dubow's Estate. His appointment took effect from 26 April 2012. Mr Barnden, having been informed of the existence of these applications, has not expressed any interest in participating or making submissions. 10In an email dated 13 August 2012, addressed to the Common Law Registrar, Ms Dubow informed him, amongst other things, that she had applied to annul her bankruptcy. However, no such order has, as yet, been made.

Relative Legislation 11Section 98 of the Civil Procedure Act 2005 gives the Court powers with respect to costs. It relevantly provides: "98 Courts powers as to costs (cf Act No 52 1970, section 76; SCR Part 52A, rules 5, 6, 7 and 8; Act No 9 1973, section 148B; Act No 11 1970, section 34) (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. ... (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. "

Applicable Principles to Gross and Fixed Sum Costs Orders 12The desirability of making a gross sum costs order depends upon a variety of factors including, but not limited to, avoidance of expense, delay and aggravation likely to be involved in a contested costs assessment. As well, a Court ought have regard to the likelihood that the additional costs of a formal assessment would disadvantage the successful party, particularly where the unsuccessful party is potentially unable to pay those costs; 13In Harrison & Anor v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738, Giles JA was dealing with Part 52A r 6 of the Supreme Court Rules. So far as is presently relevant, the terms of the Rule with which his Honour was dealing and the provisions of s 98 of the Civil Procedure Act, are identical. Speaking of the rule which permits the Court to make an order that a party pay a specified gross sum instead of assessed costs, his Honour said: "21. The power conferred by r 6(2) is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment ... Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum 'can only be fixed broadly having regard to the information before the Court'; in Hadid v Lenfest Communications Inc at [35], it was said that the evidence enabled fixing a gross sum 'only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates'. The approach taken to estimate costs must be logical, fair and reasonable ... The power should only be exercised when the Court considers that it can do so fairly between the parties, that includes sufficient confidence in arriving at an appropriate sum on the materials available ...".

Ability of Ms Dubow to Pay 14I am satisfied, by reason of her bankruptcy, that Ms Dubow is unable to pay the costs of Fitness First Australia which it would incur in preparing for and in undertaking the assessment. As well, for the same reason, it appears to me that it is unlikely that she would be able to meet any liability arising from the order for the legal costs of the proceedings which result from the assessment in full. 15This suggests that, at least initially, the circumstances would warrant the exercise of the Court's discretion to make the specified gross costs order which Fitness First Australia seeks.

Would an Assessment of Costs be Protracted? 16There is evidence tendered on this motion which demonstrates to my satisfaction the following: (a)in other cases involving these parties, the process of assessment of costs has been contested and has taken significant time; (b)Fitness First has provided all of the details of its fees, costs and disbursements, in a way which allows this Court to have a reasonable degree of confidence in the basis for those charges; (c)the Court is in a good position to make an estimate of the costs which is fair and reasonable.

Discernment 17Given these matters, in light of the extended and combative relationship between the parties, and in light of Ms Dubow's application for the annulment of her bankruptcy, the question remains whether the Court ought exercise the discretion which it has. 18In so doing, the provisions of s 56 of the Civil Procedure Act, are an important feature. The court is obliged when dealing with these applications for orders pursuant to the Civil Procedure Act to "... facilitate the just, quick and cheap resolution of the real issues in the dispute ..." 19There is no doubt as a consequence of the Court's orders, that Ms Dubow has a liability for costs which is now part of her bankrupt estate. The only matter in issue is the amount of those costs. But there is no evidence or submission from Ms Dubow's trustee in bankruptcy seeking to dispute the amount. There is no evidence or submission by Ms Dubow which convincingly points to any fact or facts which would undermine or cast doubt upon the methodology followed by the lawyers for Fitness First in the making of charges to their client. 20In all of those circumstances, I am persuaded that this is a matter which justifies the exercise of the Court's discretion to make the requisite orders, as sought in this motion.

Amount 21Mr Orlizki's evidence satisfies me that a proper allowance for costs on the ordinary basis is between 60 per cent and 80 per cent of the total costs charged to, and paid by, his client. This percentage range accords with the Court's experience. 22Applying a broad-brush approach, I propose to allow two thirds of the costs actually paid as appropriate to be paid by Ms Dubow. 23It is necessary to examine each of the matters before the Court. I accept that it was reasonable for Fitness First's lawyers to combine their fees and charges in proceedings 2011/211563 and 2011/152563 because those matters were closely related, and by doing so, duplication of costs would be avoided. 24In proceedings 2011/39995, Fitness First Australia has incurred $10,127.49 in costs. An appropriate allowance for costs on the ordinary basis is $6,750.00. 25In proceedings 2011/39253, Fitness First Australia has incurred $48,138.06 in costs. An appropriate allowance for costs on the ordinary basis is $32,000. 26In proceedings 2011/211563 and 2011/152563, Fitness First Australia has incurred $123,123.99 in costs. An appropriate allowance for costs on the ordinary basis is $82,000.00.

Orders 27In make the following orders: In proceedings 2011/152536 - Fitness First Australia Pty Ltd v Yolande Victoria Frances. Dubow. (1)I order that Ms Dubow pay the costs of Fitness First Australia Pty Ltd, on the ordinary basis, in the following specified gross sum: $82,000.00. In proceedings 2011/211563 - Fitness First Australia Pty Ltd v Yolande Victoria Frances Dubow (1)I order that Ms Dubow pay the costs of Fitness First Australia Pty Ltd, on the ordinary basis, in the following specified gross sum: $82,000.00. (2)I note that the sum specified and ordered to be paid in these proceedings is identical with that specified and ordered to be paid in proceedings 2011/152563. Fitness First Australia Pty Ltd is not entitled to enforce the costs order in these proceedings, if it has enforced the costs order in 2011/152563. In proceedings 2011/39253 - Yolande Victoria Frances Dubow v Fitness First Australia Pty Limited. (1)I order that Ms Dubow pay the costs of Fitness First Australia Pty Ltd, on the ordinary basis, in the following specified gross sum: $32,000.00. In proceedings 2011/39995 - Yolande Victoria Frances Dubow v Fitness First Australia Pty Limited (1)I order that Ms Dubow pay the costs of Fitness first Australia Pty Ltd, on the ordinary basis, in the following specified gross sum: $6,750.00.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 August 2012

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